After months of deliberation, the troubled housing financier Dewan Housing Finance Corporation (DHFL) has finalised and placed a resolution plan to its lenders on Tuesday. The company, in an intimation to stock exchange, communicated that the draft resolution plan was formulated in consultation with a special committee set up for this purpose and its financial advisor, Ernst & Young. The plan was submitted to its lenders on Tuesday.
As per the proposed resolution plan, lenders may not have to take a principal haircut on their exposure to DHFL. It has proposed steps and measures towards addressing asset-liability mismatch, while seeking moratorium on bank loan repayments. DHFL is also seeking fresh lines of credit from banks and/or National Housing Bank (NHB) for restarting its retail lending business. DHFL stock rose by 8.58 per cent in BSE to trade at Rs 45.55 apiece.
Banks have an exposure of Rs 40,600 crore to DHFL as on March 31, 2019 while the housing financier has an obligation of Rs 45,380 crore towards those holding its bonds and debentures. DHFL’s loans assets totalled to Rs 98,000 crore. It is understood that DHFL has sought fresh loans of Rs 1,200 crore – Rs 1,500 crore a month which will be backed by fresh loans the company will lend after restarting its business. Also, DHFL is seeking a moratorium of 6 – 12 months on these fresh loans while it is also seeking for an extension of tenure on current loans as well. The consortium of bankers led by Union Bank of India is yet to approve these proposals put forth by DHFL.
In another development, DHFL intimated that one of its joint statutory auditors - Deloitte Haskins & Sells LLP tendered its resignation as statutory auditors of the Company. DHFL is in discussion with reputed audit firms for appointment as statutory auditors. Deloitte in its resignation letter has stated in the disclaimer of opinion in DHFL’s financials for FY19, its consequential effect on reporting under the Companies Act, and Deloitte’s policy on client acceptance and continuation does not permit the firm to continue as statutory auditors of DHFL.
As per the proposed resolution plan, lenders may not have to take a principal haircut on their exposure to DHFL. It has proposed steps and measures towards addressing asset-liability mismatch, while seeking moratorium on bank loan repayments. DHFL is also seeking fresh lines of credit from banks and/or National Housing Bank (NHB) for restarting its retail lending business. DHFL stock rose by 8.58 per cent in BSE to trade at Rs 45.55 apiece.
Banks have an exposure of Rs 40,600 crore to DHFL as on March 31, 2019 while the housing financier has an obligation of Rs 45,380 crore towards those holding its bonds and debentures. DHFL’s loans assets totalled to Rs 98,000 crore. It is understood that DHFL has sought fresh loans of Rs 1,200 crore – Rs 1,500 crore a month which will be backed by fresh loans the company will lend after restarting its business. Also, DHFL is seeking a moratorium of 6 – 12 months on these fresh loans while it is also seeking for an extension of tenure on current loans as well. The consortium of bankers led by Union Bank of India is yet to approve these proposals put forth by DHFL.
In another development, DHFL intimated that one of its joint statutory auditors - Deloitte Haskins & Sells LLP tendered its resignation as statutory auditors of the Company. DHFL is in discussion with reputed audit firms for appointment as statutory auditors. Deloitte in its resignation letter has stated in the disclaimer of opinion in DHFL’s financials for FY19, its consequential effect on reporting under the Companies Act, and Deloitte’s policy on client acceptance and continuation does not permit the firm to continue as statutory auditors of DHFL.
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